FundsNetwork: Re-reg must come under adviser charging rules

FundsNetwork has urged the regulator to change tack and include platform re-registration under adviser charging principles as part of a wide-ranging critique of the regulator's legacy asset paper.

In its November consultation on the treatment of legacy assets, the FSA set out a narrow set of circumstances under which advisers will be allowed to continue receiving commission in the post-RDR world - including when a client re-registers with another platform.

But FundsNetwork, in its response to the paper, said platform re-registration should come under adviser charging rules.

The platform said it is seeking "urgent clarification" on the matter, arguing re-registration should come under adviser charging rules because the transfer of assets between platforms could result in an investor receiving a "significantly different" service.

A transfer of assets could potentially require a move between share classes because the receiving platform may not hold like-for-like share classes. This, it said, would likely result in a different price for an investor.

Meanwhile, the platform said ongoing ambiguities on the treatment of legacy assets must be resolved to ensure successful implementation of the retail distribution review (RDR).

It warned the FSA's current stance - that legacy commission should be banned - risks poor consumer outcomes.

In its response to the paper, it urged the regulator to issue "clear and practical examples" for a range of legacy scenarios in order to foster a common understanding.

In particular, it said guidance on which events constitute a personal recommendation - thereby coming under the legacy ban - do not go far enough to ensure consistent interpretation.

It also took issue with the regulator's use of language, saying the term "additional" is unhelpful in relation to legacy commission because it implies the rule may only apply where there is an increase in the amount of commission paid.

In the paper the FSA defined legacy commission as "additional commission that might have become payable in relation to legacy assets where there has been a change or addition to the product or investment post-RDR".

Furthermore, the platform said it sees a "substantial difference" between the treatment of life and non-life policies, with trail commission typically applied at the life wrapper level.

"The consultation paper fails to resolve the ambiguity surrounding this issue and we urge the FSA to resolve this as soon as possible," said Fidelity Worldwide Investment head of commercial Ed Dymott.

"Not only is there a risk that these rules are interpreted inconsistently by the market, but the longer the FSA delay this issue, the more pressure they place on the industry to meet the deadlines."